UDAN takes off
The Regional Air Connectivity Scheme, popularly known as UDAN ( Ude Desh ka Aam Nagrik) has been launched with first flight from Simla to Delhi in late April. There are select airlines to operate on 128 routes to 70 airports.
The Regional Connectivity Scheme (RCS), also known as UDAN ( Ude Desh ka Aam Nagrik, translated as ‘let the nation’s common man fly’) will shortly get underway, with five airlines, including SpiceJet and Air India subsidiary Alliance Air, winning bids to operate on 128 routes. 70 airports, including 31 unserved and 12 under-served stations, will be connected under the new scheme, which will have fares for 50 per cent of seats on each flight capped at Rs 2,500 per seat per hour of travel. Air Odisha received the maximum number of UDAN routes at 50, followed by Air Deccan with 34 and Turbo Megha Airways with 18. Alliance Air will operate 15 routes, while SpiceJet won bids for 11.
Announcing the names of winning bidders and the routes, Civil Aviation Secretary RN Choubey said 128 routes are being awarded to five operators, which will fly 19- to 78-seat aircraft connecting airports spread across 20 states and union territories, including Punjab, Uttar Pradesh, Madhya Pradesh, Maharashtra, Andhra Pradesh, Gujarat, Himachal Pradesh, Karnataka, Tamil Nadu and Puducherry. Airports that will be connected under UDAN include Bhatinda, Shimla, Bilaspur, Neyveli, Cooch Behar, Nanded and Kadapa. Under the scheme, operators will be extended ‘viability gap funding’ — for which money is partly raised through a levy of up to Rs 8,500 on flights operating in major routes like Delhi and Mumbai. The viability gap amount is estimated to be “around Rs 205 crore per annum” for the operators chosen in the first round of bidding, said Choubey. When asked how the amount of Rs 205 crore could translate in terms of increased price on fliers on the major routes where the levy is imposed, Choubey said it would be around “Rs 50 per passenger. That is the ‘ball park’ figure, which is less than 1 per cent of the average ticket price.”
Choubey also said that airports to be served under this round of UDAN are in “ready to fly or nearly ready to fly conditions” and the next round of bidding would “commence shortly.” Minister of State for Civil Aviation Jayant Sinha said criteria for selecting the winning bidders was based on the level of viability gap funding each of them sought per seat. The viability gap funding would be in place for three years for the airlines concerned from the date of starting operations in a particular UDAN route. The scheme also provides for various benefits including no airport charges and three-year exclusivity on the routes.
However, SpiceJet CMD Ajay Singh said that the airline would not be availing viability gap funding, while Amber Dubey, Partner and Head of Aerospace and Defence at KPMG in India pointed out that timely payment of viability gap funding would be key to sustainable operations. “AAI must install fool-proof monitoring mechanism to ensure no undue delays happen,” he said.